A feast of options for online reservations

Newcomers use lower costs in bid to lure restaurateurs

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At Bondir, Erin Reilley used UReserv, the newest online reservation service, on an iPad.

By Michael B. Farrell
Globe Staff
March 28, 2012

Savvy diners looking for last-minute reservations during the rush of Boston Restaurant Week know a smartphone can help get them a table fast. With an app from OpenTable Inc., it takes only a few taps of the screen to book a spot at the closest steakhouse or sushi bar.

That convenience is free for diners, but can be costly to restaurants that list on OpenTable. Some busy eateries can pay thousands of dollars a month to OpenTable for its reservation service and, as important, to use the company’s technology to manage their restaurants.

Now, several start-ups are challenging the reign of the 14-year-old San Francisco company that has become the go-to destination for Web reservations. It provides reservations and management services to about 800 restaurants in the Boston area, but has become vulnerable to competition because of its fees.

Earlier this month, Boston restaurateur Jeffrey Gates of the Aquitaine Group and entrepreneur Van Garrett unveiled UReserv, the newest entrant into the online reservation market. It joins Urbanspoon, Reservation Genie, TableControl, to name a few, as services that want a bite out of the growing business.

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“Somebody is going to make the online reservation experience for restaurateurs more democratic, and less expensive,’’ said Gates, who said his own frustration over OpenTable’s terms and fees led to the launch of UReserv. His company has paid OpenTable as much as $14,000 a month for computer tools that manage reservations and seatings at its six restaurants, including the Gaslight Brasserie.

The rise in competitors is offering more choices to diners. Restaurants that cannot afford OpenTable can now add an online reservation capacity through a less-expensive UReserv. Diners can feed off the foodie culture of Urbanspoon to find boutique kitchens and other gems that would otherwise be lost among the vast listings of OpenTable - if there at all.

UReserv and other competitors are challenging different aspects of OpenTable’s dominance: Some offer room-management technology and tools for restaurants to take Web reservations themselves; others appeal directly to diners who want to book tables online. While varying in popularity, none have been able to knock OpenTable from its perch so far, and indeed, many local restaurateurs said they are loath to stop using OpenTable altogether because it brings so many customers to their tables.

Even Gates, the cofounder of UReserv, plans to keep using OpenTable at his restaurants.

UReserv charges restaurants a flat fee of $30 a month to use both its online reservation and dining-room management systems. It gives restaurants a widget they install on their own websites for diners to make reservations. But unlike OpenTable, UReserv does not have its own separate website or app where patrons can browse for restaurant suggestions.

So far, more than 150 restaurants have signed up, including some of the Boston area’s most talked about restaurants such as Bondir in Cambridge. A few other eateries, such as Journeyman in Somerville, are using Urbanspoon’s Rezbook system, which costs $199 a month plus $1 per diner when reservations are made through the Urbanspoon website or mobile app. Like UReserv, it doesn’t charge for reservations made directly through the restaurant’s own website.

By contrast, OpenTable fees for restaurant reservations start at 25 cents and can run as high as $7.50. Much of its revenue is from leasing software and hardware that restaurants use to manage the ebb and flow of traffic at their tables. In 2011, OpenTable saw its revenue jump to $140 million and enrolled restaurants reached 25,000 worldwide.

Ann Shepherd, OpenTable’s senior vice president of marketing, said the company has fended off rivals before, and continues to offer restaurants access to thousands of new diners.

“We help restaurants fill seats that might otherwise go empty,’’ she said. “On the consumer side, we try to provide a service that is better than the phone.’’

Though many restaurants still take reservations over the phone, the Internet is gaining as the preferred medium for diners. The National Restaurant Association says 27 percent of diners use the Web to book tables, and that 65 percent of fine-dining restaurants offer online reservations.

Smartphone apps are increasingly popular, with OpenTable reporting that its tool has been used to fill about 20 million restaurant seats since it was introduced in 2008. The software allows diners to search for restaurants by neighborhood, cuisine, and price, and easily move from reading the menu to booking a table.

“I’m a last-minute Sally, so I use it a lot when I’m out,’’ said Trisha Nugent, a teacher from Brookline and OpenTable user.

OpenTable’s dominance is evident during Restaurant Week, which ends Friday. At Upstairs on the Square in Cambridge, up to 80 percent of reservations can come via OpenTable during busy times. Co-owner Mary Catherine Deibel said she pays OpenTable $1 for every diner who reserves through OpenTable’s website or mobile app, and 25 cents for each diner when the reservation is made through an OpenTable widget on the restaurant’s site.

Deibel has something of a love-hate relationship with OpenTable, which her restaurant has used for 10 years. She doesn’t like its fees, but has no plans to rip out its equipment.

“The one thing that OpenTable has done is court diners,’’ she said. “It is valuable.’’

Frank McClelland, owner of L’Espalier and the Sel de la Terre restaurants, started using UReserv in September to capture reservations via the Web and Facebook. Now he doesn’t have to pay OpenTable 25 cents per diner for each online reservation made on his restaurants’ sites. Many restaurateurs say those fees add up.

However, McClelland hasn’t given up on OpenTable entirely. He still has his restaurants included on OpenTable’s listings.

“The main concern in giving up OpenTable is with people who rely on the OpenTable.com website to search for restaurants, as opposed to people who have their mind made up on where they want to go before visiting OpenTable.com,’’ McClelland said.

But some smaller restaurants don’t have the volume to justify the expense. At Journeyman, co-owner Meg Grady-Troia first used Save My Table, a Brookline company, for about a year, and then switched to Urbanspoon, which she said offered a more complete reservation package. For the prices that OpenTable charges, she said she could hire a new employee to handle reservations.

While popular in New York and San Francisco, Urbanspoon’s Rezbook system has enrolled only 15 restaurants in the Boston area. Conrad Saam, an Urbanspoon spokesman, said he expects the company to make a more concerted effort to woo Boston eateries and diners.

After all, Saam said, “The most expensive thing for a restaurant is an empty seat.’’

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